2019 (10) TMI 790 - AAR - GST

Concessional Rate of tax - commodities such as marine propellers, rudder set, stem tube set, propeller shaft and couplings used only for the purpose of the fishing or floating vessels - taxable @ 5% or otherwise? HELD THAT - In the instant case, it is an admitted fact that the applicant manufactures marine propellers and its accessories which are meant for use in fishing sector. The applicant contended that their products are exclusively meant for fishing vessels. However they have not provided any evidence towards exclusive usage of their products. Therefore the products of the applicant become parts of the goods falling under 8901, 8902, 8904, 8905, 8906 8907, only when they are meant for the said goods. Hence the concessional rate of GST in terms of entry number 252 of Schedule - I to the Notification No. 1/2007-Central Tax (Rate) dated 28.06.2017 would be applicable to the applicant subject to the condition that their product are used only as parts of goods falling under 8901, 8902, 8904, 8905, 8906 8907.

Summary

Issues involved:
1. Determination of the applicable tax rate on commodities like marine propellers, rudder set, stem tube set, propeller shaft, and couplings used for fishing or floating vessels.

Analysis:
1. The applicant, a Private Limited Company, sought an advance ruling to ascertain if the tax rate applicable to their products, used for fishing vessels, should be 5% as per specific entries in the Central Tax (Rate) notification.

2. The applicant manufactures marine propellers and accessories for the fishing sector, charging 18% GST presently. They argued that their products should be taxed at 5% under entry 252 of the notification, considering them as parts of fishing vessels under HSN Code 8902.

3. The Authority examined Chapter 89 of the tariff which covers fishing vessels, factory ships, and other related structures. It was noted that the applicant's products must be exclusively used for fishing vessels to qualify for the concessional tax rate under entry 252 of the notification.

4. The Authority ruled that the concessional 5% GST rate is applicable to the products, including marine propellers, rudder set, stern tube set, propeller shaft, and MS couplings, only if they are indeed used as parts of goods falling under specific headings mentioned in the notification.

By analyzing the facts and legal provisions, the Authority concluded that the applicant's products could benefit from the lower tax rate if they are established to be exclusively used for fishing vessels.